Third party insurance is mandatory under the Motor Act of India. The policy is called ‘third-party’ cover because it is the third party to the car policy, which is not part of the insurance contract. Hence, the policy does not extend the policy coverage to the insured. The insurance company pays for the liability as per the contract between the two parties. It covers the legal liability of the policyholder for accidental death/ bodily injury or property damage caused to a third party. As mentioned above, third party car insurance does not cover the insured car against any damage due to online theft, accident etc.
As per the rules of Motor Vehicle Act 1988, Insurance Regulatory and Development Authority of India (IRDA) calculates third party damages.
Why do you need third party insurance?
Apart from the legal clause, third party insurance comes in handy when your vehicle collides with another vehicle. You cannot measure the level of damage caused by an accident – it can even lead to death. In such cases, the victim is allowed to file a case to claim compensation. This is where third party insurance comes in handy. It covers the insured vehicle if a liability claim arises out of bodily injury, property damage, or death of a third party. As per the IRDA guidelines, while there is no limit in case of death, the property damage cover is limited to Rs 7.5 lakh in case of car insurance and Rs 1 lakh in case of two wheeler insurance. It is better than third party liability insurance if you own a vehicle that is more than 5 years old.
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How does third party insurance work?
As stated earlier, third party insurance is liability insurance that works towards easing the legal liabilities of the first party for causing damages to third parties. The first party refers to the insured who is responsible for the loss/damage caused to the third party, who files a liability claim against the insured. The second party or the insurance company helps in reducing the financial burden of the insured by paying the legal liabilities towards the third party.
Insurance companies cover two types of motor third party insurance claims – bodily injury liability and property damage liability.
Third party bodily injury liability claim arising from the insured causing bodily injuries to another person along with his vehicle. Such claims provide coverage for hospitalization expenses, pain and suffering, loss of income as well as death or permanent disability as a result of the accident.
Third party property damage liability claim covers property damage or complete loss of property due to the insured vehicle. This includes claims related to damaged landscape, such as a fence, lawn, mailboxes, fence gates, replacement of damage to structures, shops, etc. property.
Key benefits and importance of third party insurance:
Provides legal cover and financial assistance:
The legal liability of the insured is covered under the third party insurance plan, in case of death or disability of the third party or any loss or damage to the third party property. Third party liability policy takes care of the financial and legal burden on the insured. Despite the fact that the direct beneficiary is neither the insurance company nor the insurer, but a third party, this is the most important benefit that a third party insurance ensures for the owner or driver of the insured vehicle.
Easy, seamless and fast process to get third party insurance:
Third party liability insurance can be easily purchased and accessed. You can also renew this policy online by visiting the official website and following the online instructions.
cost effective policy
The coverage offered under Third Party Liability Insurance appears to be exceptionally cost effective and rewarding in terms of its cost and premium rate. Even if you have to use it as an essential or add-on part of the core policy, it benefits you to the fullest. However, at the time of computing the compensation amount, the annual income of the insured is considered.
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Features of Third Party Car Insurance:
The following are taken care of by standard third party car insurance in case of an accident that results in your vehicle:
death or bodily injury to a third party
Damage to third party property
Mandatory personal accidental cover up to Rs.15 lakh for owner/driver (only in case the personal accident component is covered in the policy)
The following salient features are a part and parcel of a third party insurance plan:
The insured, the insured or injured third party, is the beneficiary of third party liability insurance. These beneficiaries are only nominal beneficiaries of third party car insurance. In practice money is paid by the insurance company directly to the third party or its solicitor.
Injuries to the insured are not covered under third party car insurance. It covers the loss caused by the policyholder to other people.
In these plans, the third party car insurance premium does not vary with the value of the vehicle insured as it is a ‘legal liability’ and it is impossible to know what that liability would be.
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Reimbursement involves the help of lawyers.
With the option to renew or buy third party car insurance premiums online, the process is easy, quick and seamless and completely depends on your time and convenience.
Types of Third Party Insurance:
Third party motor insurance can be classified into two parts:
Third Party Liability Car Insurance
Third Party Liability Two-Wheeler Insurance
Third Party Liability Car Insurance:
Third party car insurance is a risk cover whereby the insurer indemnifies any legal liabilities claimed by the third party involved in an accident where the insured vehicle is at fault. According to the Motor Vehicles Act 1988, driving an uninsured vehicle on Indian roads is an offense under section 146. This is why liability insurance is also known as an ‘act only’ plan. However, the scope of cover does not include loss or damage to the insured vehicle.
Third Party Liability Two Wheeler Insurance:
Third party bike insurance in India is mandated by law for all registered vehicles plying on the roads. This rule also applies for two wheelers. Non-compliance can lead to legal punishment, which includes heavy fines and prosecution under the Motor Vehicles Act, under road safety laws. Hence, due to the risk associated with this type of vehicle (bike), insuring it with adequate planning is an ideal decision.
Third party liability insurance for personal vehicle cover
Third Party Liability Insurance for Personal Vehicle Cover:
damage to third party property
bodily injury or death of a third party
Permanent total disability of the driver/owner of the insured vehicle (depends on the insurer)
Accidental death of the driver/owner of the insured vehicle
Third Party Liability Insurance for Commercial Vehicle Cover
Third Party Liability Insurance for Commercial Vehicle Cover:
The policy covers your legal liability for injury or damage caused by you to third parties.
Death or any bodily injury of a third party
The third party has suffered property damage up to Rs 7.5 lakh (car) / 1 lakh (bike).
Coverage of third party insurance
A third party car insurance policy provides coverage against the following risks:
1.Third Party Liabilities
Third party liabilities arise from any loss or damage caused to a third party by the insured car during an accident. Since the accident is caused by the insured car, it is the responsibility of the owner of the insured car to pay for the damages. Third party liability insurance covers legal liabilities arising out of:
Property Damages – If you, unfortunately, crash your car into the property of a third party person, such as a boundary wall or shop, your third party insurance policy will pay for the damage or damage sustained by that person.
Car damages – If you accidentally hit the car of a third party person with your own vehicle while driving, your insurance policy will come to your rescue and pay for the damage caused to that person’s car on your behalf Will do
Accidental bodily injury – If you accidentally hit a third party person with your car, your third party insurance company will pay for the treatment of his/her bodily injuries.
Accidental Death – If you accidentally drive your car on someone or cause mortal injury to a third party person causing his/her untimely death, your motor insurance provider will compensate the aggrieved family on your behalf.
- Personal Accident Cover
Some motor insurance companies also provide personal accident cover to the owner-driver of the insured car. As part of this cover, the owner-driver of the car is provided with compensation if he/she suffers from disability or dies as a result of a car accident. In the event of the death of the policyholder, the nominee appointed by the car owner is compensated.
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Advantages of third party insurance
Third party insurance comes with its own set of benefits. To know how it is beneficial to buy a third party cover for your car, take a look at some of the benefits of buying a third party insurance policy:
1 fulfills a legal mandate
According to the Indian Motor Vehicles Act, 1986 it is legally mandatory for all car owners in India to own a third party insurance cover to be able to use their cars on public roads. Thus, if you buy third party insurance for your car, you comply with the laws of the country and avoid paying challans or fines for its violation.
Covers 2 third party legal liabilities
As the name suggests, third party insurance covers all third party legal liabilities of the policyholder if he causes accidental loss or damage to any third party person. Not only does it pay for damages caused to someone else’s car or property, but it also provides compensation to a third party person in case of injury or death.
3 Provides financial aid
If you are unable to pay for damages or damages caused to a third party person, then legal liabilities can suffer financially and lead to bankruptcy. This is where third party insurance comes in because it gives you the necessary